Redskins' Stadium A Modern Monument To Private Financing ``the Washington Model Is A Very Difficult Model To Export,'' Sam Katz Has Cautioned Philadelphians.

Posted: November 17, 1998

A decade ago, Jack Kent Cooke had a dream.

To reward the loyal fans of the Washington Redskins, he would build a great, gleaming concrete-and-steel stadium, an imposing edifice with a grass field paid for with his own millions.

Cooke died before he could see his dream realized, but realized it was, in the form of Jack Kent Cooke Stadium, a three-tiered open-air arena girdled with green, glassed-in luxury boxes, which seats 80,116 and generated an estimated $40 million profit for the team in its first year.

The football stadium stands as tribute to Cooke and as evidence that it is possible - at least in Washington - for a sports team to build a home financed largely with private money.

For Philadelphia fans who watched the game played against the Redskins at Jack Kent Cooke Stadium on Sunday, an inevitable question arises at a time when the Eagles and the Phillies are clamoring for new stadiums of their own: Why should the public provide any funding for pro sports parks?

In some ways, the question may be moot: Gov. Ridge has committed the state to providing a third of new-stadium costs, and the city and the teams have agreed to split the difference for the rest. The state legislature could decide to approve state funding for the project in the next several weeks.

It remains uncertain whether the city will build two new stadiums, which Mayor Rendell has said is his first choice, or one new facility for one team while refurbishing Veterans Stadium for the other.

But, should the city ultimately agree to build two stadiums, the total cost could exceed $500 million, of which two-thirds would be publicly funded.

The argument for public financing is that neither team has the resources to build a stadium on its own and still be financially stable enough to field a competitive team.

And the reality is that few sports stadiums today have been built with only private financing. Even Jack Kent Cooke Stadium had substantial public participation.

While the Redskins raised $190 million for the the stadium itself, the state of Maryland contributed about $70 million in roads and infrastructure costs.

``Jack Kent Cooke is trying to create a franchise that will be profitable and increase in value for years to come,'' the Redskins' executive vice president, Walter Lynch, said as the stadium was being built. ``It can be done by building a stadium with private money.''

Revenue from the new stadium's 208 luxury suites and the large number of seats has significantly boosted the worth of the team, considered one of the most valuable in the NFL. Currently for sale, it is expected to draw more than the $530 million that was paid for the expansion Cleveland Browns in September.

But building the stadium with private money wasn't easy, according to Martin Klepper, a lawyer with the Washington firm of Skadden, Arps, Slate, Meagher & Flom, who helped arrange the financing.

``It was difficult, and it won't work in every market,'' he said. ``The Redskins are a unique franchise, even in professional sports. They are the premier franchise in this city. They played to a sold-out crowd for the life of RFK Stadium. They had a waiting list of 49,000 people for season tickets.''

The demand for tickets was one reason the stadium could be privately financed. RFK seated 56,454. The new stadium had room for nearly 25,000 more fans. Jack Kent Cooke Stadium's luxury suites rent for as much as $150,000 a season. The stadium also has 15,000 premium club seats.

On top of that, the team charges the highest average ticket price in the league: $74.28.

That and Jack Kent Cooke's being a multibillionaire enabled the owner to finance a stadium that probably could not be built similarly elsewhere, many experts say.

``The Washington model is a very difficult model to export,'' said Sam Katz, an expert in financing sports facilities who is now running for mayor of Philadelphia.

The reasons, Katz and others say, include Cooke's wealth and the great demand for corporate suites in the nation's capital, where there is no shortage of firms looking for entertainment outlets for clients.

``The size of the luxury-suite market makes Washington unique,'' Katz said.

Elsewhere, including Philadelphia, the economics of the sport make football a poor risk for lenders asked to provide funds for a privately financed stadium, many experts say.

``It's basically not a profitable thing to do, especially if you are talking about a football stadium,'' said Andrew Zimbalist, an economics professor at Smith College whose specialty is sports business.

The difficulty is that a professional football team has only eight home dates in the regular season. Even if the stadium was used for college football games and rock concerts, it still would have relatively few opportunities to generate revenue.

``From the perspective of football, it doesn't make economic sense to build it with private funds,'' said Dean Bonham, president of the Bonham Group, a Denver-based sports marketing firm.

Bonham even questioned Cooke's expenditure in Washington.

``In the case of Jack Kent Cooke Stadium, Cooke spent something in the order of $200 million,'' he said. ``There remains a question in my mind whether the facility will ever pay for itself. That was a decision made not on economics but on emotion.''

The experts say building a privately financed baseball stadium probably would not be much more feasible in most markets.

One place where it is being tried is San Francisco.

But not by choice. The San Francisco Giants decided to finance their own stadium after the city's voters rejected plans requiring public funds.

To pay for the Pacific Bell Park in China Basin, the Giants borrowed $170 million and raised an additional $136 million, much of it through the sale of naming rights and personal seat licenses.

``We're not listening to the skeptics who say it can't be done,'' said the Giants' executive vice president, Larry Baer. ``We are listening to our lenders, because they are certain this project is sound.''

In Philadelphia, the city and the Phillies have uniformly dismissed the use of personal seat licenses, which amount to a fee charged to fans for the right to buy season tickets.

In San Francisco, personal seat licenses raised about $40 million for the stadium project. Without the money, it would seem likely that the stadium could not be built.

According to sports finance experts, the only type of professional sports facility where private financing typically makes sense is an indoor arena, such as the First Union Center here or the MCI Center in Washington, both of which were paid for without public funds.

Such arenas cost less to build to begin with. More important, they often serve as home to two sports teams - in basketball and hockey - that between them would have about 80 home dates.

Concerts, rodeos, pro wrestling cards and other events could bring the number of dates to more than 200, all revenue-producing.

``It is a much different revenue stream,'' said Zimbalist, the Smith College professor. ``And it can work, but it is very unlikely to work for a stadium. And it is particularly unlikely to work for a football stadium.''

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